Correlation Between Firetrade Engineering and CHAOSUA FOODS

Can any of the company-specific risk be diversified away by investing in both Firetrade Engineering and CHAOSUA FOODS at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Firetrade Engineering and CHAOSUA FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Firetrade Engineering Public and CHAOSUA FOODS INDUSTRY, you can compare the effects of market volatilities on Firetrade Engineering and CHAOSUA FOODS and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Firetrade Engineering with a short position of CHAOSUA FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firetrade Engineering and CHAOSUA FOODS.

Diversification Opportunities for Firetrade Engineering and CHAOSUA FOODS

-0.68

Correlation Coefficient

Firetrade Engineering  CHAOSUA FOODS

Excellent diversification

The 3 months correlation between Firetrade and CHAOSUA is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Firetrade Engineering Public and CHAOSUA FOODS INDUSTRY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHAOSUA FOODS INDUSTRY and Firetrade Engineering is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Firetrade Engineering Public are associated (or correlated) with CHAOSUA FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHAOSUA FOODS INDUSTRY has no effect on the direction of Firetrade Engineering i.e., Firetrade Engineering and CHAOSUA FOODS go up and down completely randomly.

Pair Corralation between Firetrade Engineering and CHAOSUA FOODS

Assuming the 90 days trading horizon Firetrade Engineering Public is expected to generate 0.36 times more return on investment than CHAOSUA FOODS. However, Firetrade Engineering Public is 2.75 times less risky than CHAOSUA FOODS. It trades about 0.09 of its potential returns per unit of risk. CHAOSUA FOODS INDUSTRY is currently generating about -0.26 per unit of risk. If you would invest  145.00  in Firetrade Engineering Public on September 14, 2024 and sell it today you would earn a total of  8.00  from holding Firetrade Engineering Public or generate 5.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Firetrade Engineering Public  vs.  CHAOSUA FOODS INDUSTRY

Firetrade Engineering

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Firetrade Engineering Public are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Firetrade Engineering is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

CHAOSUA FOODS INDUSTRY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHAOSUA FOODS INDUSTRY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Firetrade Engineering and CHAOSUA FOODS

The main advantage of trading using opposite Firetrade Engineering and CHAOSUA FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firetrade Engineering position performs unexpectedly, CHAOSUA FOODS can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CHAOSUA FOODS will offset losses from the drop in CHAOSUA FOODS's long position.

The idea behind Firetrade Engineering Public and CHAOSUA FOODS INDUSTRY pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.